Merrill Lynch plans Stars linked to Dow Jones Industrial Average

By Jennifer Chiou

New York, July 31 - Merrill Lynch & Co., Inc. plans to price 0% Strategic Accelerated Redemption Securities due September 2010 linked to the Dow Jones Industrial Average, according to an FWP filing with the Securities and Exchange Commission.

The notes will be called at increasing premiums if the index closes above its starting level on any of three observation dates.

The redemption amount will be between 109% and 113% of par in September 2009, between 113.5% and 119.5% of par in March 2010 and between 118% and 126% of par in September 2010. The exact redemption amounts will be set at pricing.

The payout at maturity will be par if the final index level is at least 90% of the initial level. Investors will lose 1% for each 1% that the index declines beyond 10%.

Merrill Lynch said it has applied to list the notes on the American Stock Exchange under the symbol "DCX."

The notes are expected to price in August and settle in September.

Merrill Lynch, Pierce, Fenner & Smith Inc. and its affiliate First Republic Securities Co., LLC are the underwriters.

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